Easy and Accurate: Automated Commission Management in metasfresh ERP

Sales commissions are a critical element when it comes to devising a strong business plan. Paying employees a sales commission incentivises them to produce more sales, while simultaneously rewarding and recognising those who perform most productively. In other words, sales commissions benefit both employer and employee — a successful plan drives performance in a way that helps the business become more profitable, and rewards sales representatives for meeting and exceeding targets.

As such, effective commission management is highly important, as your company’s sales commission structure has an impact not only on your profitability, but also on your ability to attract and retain the best sales talent. Many companies, however, have yet to optimise their commission management processes. In fact, research reveals that between 47% and 70% of organisations still use spreadsheets for commission management — a practice that is notoriously time-consuming, complex, and error-prone, and can easily lead to overpayments, underpayments, and employees spending more time trying to calculate and chase up their earnings rather than actually selling.

A far more advanced, accurate, and reliable way to manage and track sales commissions is to have a robust and powerful ERP such as metasfresh in place that conducts all calculations automatically, ensuring your reps are compensated without error, on time, every time.

Compensation is a hugely important factor in attracting and retaining employees — especially in sales. In fact, according to PayScale’s 2019 Compensation Best Practices Report, retention was identified as the number one reason for having a sound compensation strategy, followed by better hiring and paying for in-demand skills.

Why is a strong compensation plan so critical for retention? Because sales turnover rates are extremely high, and 89% of reps who leave a job cite insufficient compensation as the reason.

In fact, the average sales turnover rate is 35%, almost three times higher than the average turnover rate of 13% for all industries. What’s more, the average sales rep tenure now sits at just 1.5 years — which, according to figures compiled by Xactly, is a problem, considering that it takes salespeople 2-3 years to hit peak performance after starting a new role.

The 2019 Sales Compensation Administration Best Practices Survey reveals that many companies struggle with optimizing their compensation administration. Three main challenges are highlighted in the report:

1. Implementing best practices,
2. Lack of data centralisation, and
3. Non-standardised processes.

When organisations are unable to optimise their compensation administration, the report concludes, they suffer with inefficient processes, data and payment inaccuracies. A massive 83% of companies, in fact, admit that they have compensation payment inaccuracies, resulting in compensation adjustments, which erode sellers’ confidence and trust in the business and management, and ultimately costs the company in terms of time, money, and employee turnover.

However, the report also finds that compensation payment accuracy is vastly improved with automation. Indeed, the survey reveals that businesses that automate their incentive compensation processes report fewer errors than those using manual processes, with well over three-quarters of respondents (86%) achieving 95% or greater payment accuracy.

Considering that the average company spends at least 10% of revenue on incentive payments, optimising processes for efficiency and accuracy needs to be a key initiative of company leadership.

Using automated commission management tools like those built into the metasfresh ERP solution will transform the entire sales compensation operation, improving data integrity, reducing commission errors, and streamlining compensation administration processes.

metasfresh ERP provides integrated functionality for managing and tracking sales commissions and incentive programmes and processing associated payments. No matter your sales commission structure — be it base salary plus commission, revenue commission, gross margin commission, tiered commission, territory volume commission, or any other structure in between based on sales revenue, margin or quota attainment — you name it, we’ll build it! And once your system is all set up and configured as per your specifications, metasfresh ERP will track and conduct all commission calculations automatically, resulting in greater efficiency and ultimate accuracy.

The metasfresh commission management solution is as intuitive as it is effective. Within metasfresh ERP, you simply link sales reps to customers. Then, whenever an order is entered for a customer, the sales rep is automatically added to the order and receives the predefined commission for the products sold — no more manually collating and entering data into cumbersome spreadsheets.

You can also create sales rep hierarchies within metasfresh. So, where there is a sales rep who has other sales reps working for him/her, and further sales reps working for them, the percentages of the respective commission amounts can be easily adjusted for each level, ensuring that each rep is compensated accurately — and it all happens automatically once the system is configured to your company’s specific requirements.

Talk to us here at metasfresh to learn more about how you can use our powerful ERP to improve and simplify your commission management, increase payment accuracy, and build greater trust throughout your organisation.

Since 2006, we have been developing our metasfresh ERP software non-stop with open source components and under the open source licenses GPLv2 and GPLv3. Our mission is to enable each and every company to access a powerful ERP system that supports digital transformation and fuels corporate growth. Get in touch today for more information and insights.